Xanthan Gum

Xanthan Gum Global Market Outlook:

The global hydrocolloids market size is seen to witness an increase of 15 percent in 2023 with the growth driven by the expansion of the processed food industry and the petrochemicals sector, with demand likely to recover in 2023, in line with a revival in crude oil prices and global consumption.

Global hydrocolloids market (2022–2023)

• Global Market Size: 3.10 MMT

• Supply Growth Rate: 15 percent

KEY CONSUMING COUNTRIES (2022)

• Xanthan gum: APAC is the top manufacturing location for xanthan gum exporting the products to Europe and the US

• Europe is the leading consumer of xanthan gum, due to increased awareness about the use of natural products

Global Supply–Demand Analysis : Xanthan Gum

• The hydrocolloids supply is likely to have decreased in 2022, owing to a limited supply of guar gum, xanthan gum, and LBG. In 2023, the supply is estimated to increase, as the production of guar gum and LBG is set to improve

• Demand is estimated to remain stable with a slightly reduced consumption from the food sector, as major global economies prepare to face the recession headwinds

• Corn starch leads the hydrocolloids market segment, followed by guar gum due to the steep demand from the oil and gas industry and the food sector

• The use of xanthan gum and carrageenan in the food and beverage industry has been in demand, owing to the increasing health consciousness among the consumers and multi-functionality of hydrocolloids. Other hydrocolloids, such as alginates, agar, and CMC, hold a minor share

Xanthan Gum Cost Structure Analysis

Cost of industrial manufacture of Xanthan gum has marginally increased over the years with China establishing itself as the cost competitive region due to economies of scale and cheap labor. Cost has been rising proportionate to general inflation rates as major cost contributors are land and labor

• The major component of the cost of manufacturing Xanthan gum is the capital and machinery that are utilized for its industrial manufacture process, which is highly cost-effective in China due to economies of scale and cheaper availability of capital

• The feedstock raw material and industrial alcohol used in the production process contributes to about 16 percent to the overall production cost

• Xanthan gum exports have been witnessing an increase due to its use as a substitute to Guar gum in the petrochemical industry mainly off-shore oil drilling in the United States and Western Europe

• Due to cheaper Chinese exports driven by low manufacturing costs there has been several anti-dumping cases in the US against the import of Chinese Xanthan gum to protect the domestic hydrocolloid industry

Porter's Analysis on Xanthan Gum

Supplier Power

• Xanthan gum manufacturers contribute to a minor fraction to the corn market. Their major application being feed and ethanol production

• Corn prices are largely transparent and negotiations happen in line to global benchmark prices provided limited room for negotiation

Barriers to New Entrants

• Corn processing involves high capital cost and profits are generated through by-products as well

• The availability of raw materials and increasing demand for corn-derived products could ensure steady returns

Intensity of Rivalry

• There is a huge number of xanthan gum manufacturers concentrated in China, India, and the US

• As the product differentiation depends on the end-use and origin, the price premiums are also low among the sellers and switching cost is less for the buyers causing high competition among the xanthan gum manufacturers

Threat of Substitutes

• Threat of substitute is high, due to the presence of the potential substitute, such as guar gum and carrageenan, which is likely to restrain market growth of xanthan gum

• Other eminent substitutes include gluten, agar Aquiver, and flax seeds

Buyer Power

• Food and beverage sector dominate the market size of xanthan gum

• Bulk volume buyers hold an upper hand during negotiations

• Contribution of xanthan gum as a stabilizer/thickener to the cost of end product is relatively low